STRATEGIES AND TACTICS IN FREEZING INJUNCTIONS: ASSET DISCLOSURE
Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court
This year marks the golden anniversary of Lord Denning’s seminal decision on freezing injunctions in Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213. (The case was reported in 1980, but the hearing took place on 23 June 1975.) To mark the occasion, Andrew Ayres KC of Twenty Essex and Andrew Barns-Graham of 3 Hare Court have published this series of articles, in which they explore the boundaries of freezing injunctions and provide their tactical and drafting recommendations. This is the first article in the series.
Introduction
Freezing injunctions almost always include asset disclosure orders, the purpose of which is to enable claimants to “police” the injunctions and make them effective1. Lord Woolf once described asset disclosure orders as what gives freezing injunctions their “teeth”2
The thesis of this article, however, is that those teeth have tended to have too soft a bite, due to the imprecision of the model wording requiring disclosure of the “value, location and details” of assets3. A new model order which is due to come into force in April 2025 removes some of the imprecision, but, in keeping with the general theme of this series, we suggest that claimants should nevertheless be proactive in asking the court to modify the standard wording, as befits the needs of each case.
The authorities
The starting-point is that the “strict construction principle” applies to the interpretation of all freezing injunctions, i.e. they must be construed restrictively due to their draconian effect, the penal consequences of non-compliance, and the resulting risk of oppression of defendants4
In two cases, the High Court has allied the strict construction principle with a purposive interpretation and concluded that the phrase “value, location and details” requires only the disclosure of information which is “necessary” (on the facts of the specific case) for the claimant to police a freezing injunction.
In Gerald Metals S.A. v Timis & Ors5, the claimant alleged that a defendant had breached an asset disclosure order by disclosing that it was the 100% owner of company shares without also disclosing that its interest was a beneficial interest and the legal ownership had been assigned
1 Per Waller LJ in Motorola Credit Corporation v Uzan [2002] EWCA Civ 989, at [29].
2 Motorola Credit Corporation v Uzan [2002] EWCA Civ 989, at [37].
3 See paragraph 9(1) of Annex A to Practice Direction 25A and paragraph 11A of Appendix 11 to the Commercial Court Guide.
4 Per Lord Clarke in JSC BTA Bank v Ablyazov [2015] UKSC 64, at [18]-[19].
5 [2017] EWHC 3381 (Comm).
to a third party. The claimant sought disclosure of the trust/assignment documents, contending that they constituted the “details” of the shares. In the alternative, the claimant applied for the same disclosure pursuant to a variation of the original order.
Bryan J held (at [55]-[56]) that, “on the true and proper interpretation” of the order, the “most accurate answer” was for the defendant to disclose the fact of the assignment and the relevant documentation; however, he held,
“I am not making a finding of breach of the order […], but simply saying that I consider it could most accurately be complied with by providing that documentation. Whether or not that is so, in any event, I consider that it is appropriate by way of clarification or by way of addition, that such disclosure should be given, by way of variation of that order, for the avoidance of doubt.”
In PSJC Commercial Bank Privatbank v Kolomoisky & Ors6, the defendants included six companies who had disclosed various loan and trade receivables. The claimant sought more comprehensive disclosure. Joanna Smith QC (as she then was, sitting as a deputy High Court judge) ordered disclosure of further information about the contracts and details of the security and any impairments, but declined to order the disclosure of any documents, the details of the bank accounts into which any future repayments would
6 [2018] EWHC 482 (Ch).
be made, or an explanation for historic non-repayments.
Joanna Smith QC construed “details” as encompassing “high-level” information about the receivables which enabled them to be identified and distinguished from the other disclosed receivables ([80]). She interpreted “value” as meaning the “estimated realisable value” of the receivables, as opposed to merely their face values, endorsing the view given in some textbooks that the purpose of a freezing injunction is to safeguard assets for future enforcement, and for this purpose what matters is their realisable value ([89], [94] and [96]).
The issue has, however, arisen in two committal proceedings. In Aspinalls Club Limited v Lim8, Murray J held a defendant in contempt due inter alia to his deliberate disclosure of an overstated valuation of a property and his, likewise deliberate, failure to disclose that his properties were mortgaged. Regarding the latter breach, Murray J followed Privatbank and held that “value” means “realisable value”, i.e. the defendant’s equity share of each property, net of financing.
In ADM International Sarl v Grain House International SA9, the claimant obtained a freestanding asset disclosure order to aid the enforcement of an arbitration award. Subsequently, the claimant issued committal proceedings, alleging inter alia that the defendants had failed to disclose 19 mortgages and court orders which encumbered 6 properties. Cockerill J found the defendants in contempt and they appealed.
Further, she found that it is a “legitimate use of a disclosure order” to require disclosure which enables the claimant to make informed decisions about whether to spend money on taking further steps to protect assets from dissipation, e.g. by seeking relief in foreign jurisdictions ([53]).
However, although Joanna Smith QC reached these conclusions as to the proper interpretation of “value, location and details”, she ultimately accepted the claimant’s invitation to adopt a “pragmatic approach” similar to that adopted by Bryan J in Timis ([58]). In other words, rather than finding any breach by the defendants, she instead made a new disclosure order.
Many other recent authorities concerning deficient asset disclosure follow the same pattern, i.e. they involve the courts granting orders for further disclosure under section 37 of the Senior Courts Act 1981 and/or CPR 25.1(g), instead of determining, at least initially, whether the defendant breached the original orders7. This trend has resulted in a relative paucity of decisions on the proper construction of
“value, location and details”.
The Court of Appeal reversed Cockerill J’s contempt finding arising from the non-disclosure of the encumbrances. Popplewell LJ held (at [62]-[72]) that “value” meant only the market value and did not require the disclosure of the encumbrances. His grounds included that: (a) the order required disclosure of “the” value of the asset, which could mean either the market or unencumbered value, but not both; (b) as a matter of ordinary language, if a person were asked to give the value of their house, they would naturally respond with an estimate of what it could be sold for, not what equity they held after taking account of a mortgage; and (c) the application of the strict construction principle required the defendants only to disclose the market value and not also to perform the more onerous task of ascertaining and disclosing the unencumbered value.
Popplewell LJ noted that a “well-drawn disclosure order” might have expressly required disclosure of both the gross market value and any encumbrances or third party beneficial interests; however, due to point (a) above, this interpretation was unavailable.
Popplewell LJ nevertheless approved the decisions in Kolomoisky and Lim that “value” meant “unencumbered value” in those cases. This was
7 See, for example, HMRC v Malde [2020] EWHC 100 (Ch), Abu Dhabi Commercial Bank PJSC v Shetty & Ors [2021] EWHC 1532 (Comm), Al Saud v Gibbs [2024] EWHC 237 (Comm), and Harrington & Charles Trading & Ors v Mehta [2024] EWHC 2674 (Ch).
8 [2019] EWHC 2379 (QB).
9 [2024] EWCA Civ 33.
because, in Kolomoisky and Lim, the disclosure order appeared within a standard-form freezing injunction, which elsewhere expressly described “value” as meaning “unencumbered value”. In ADM, by contrast, the asset disclosure order was freestanding and included no such reference. He noted, though, that it would be
“desirable to amend the standard form to refer to unencumbered value to remove any room for doubt in the mind of a defendant without access to legal advice”.
On 13 February 2025, HMCTS announced that a revised version of CPR 25, including new model freezing and proprietary injunctions, will take effect in April 202510. The new model order expressly requires disclosure of both (a) the “market value” of all assets (ignoring charges or other security) and (b) “details of any charges or other security over such assets including the amount currently secured thereby”11 We understand that these changes were prompted by Popplewell LJ’s observations in ADM.
applied the strict construction principle far more robustly.
Thus, following ADM, claimants faced with deficient asset disclosure might be expected to incline even more towards the “pragmatic approach” of applying for supplemental disclosure, rather than taking the more difficult path of alleging that the defendant has breached the original order.
In our view, though, the need for the “pragmatic approach” is unwelcome. For claimants, it means that defendants are insufficiently discouraged from adopting an unhelpfully minimalist interpretation of their asset disclosure obligations. For defendants, they are left in doubt as to how much disclosure they are required to provide.
The “pragmatic approach” is also a recipe for satellite or further litigation; and yet, because the applications will generally be made under section 37 of the Senior Courts Act 1981 and CPR 25.1(g), they will not normally shed much light on the proper interpretation of “value, location and details”.
Having said that, we agree with the decision in ADM. In our view, it involves a proper application of the strict construction principle, whereas the broader purposive approach adopted in Timis, Kolomoisky and Lim results in defendants not being given the benefit of the doubt regarding the interpretation of the many ambiguities in “value, location and details”.
Analysis
We expect, notwithstanding Popplewell LJ’s endorsement of Kolomoisky and Lim and the recent amendments to the model order, that defendants will rely on ADM as representing a change in the proper construction of the phrase “value, location and details”. Whereas in Kolomoisky and Lim (and also Timis) the court construed the phrase purposively such as to encompass a broad range of information which is necessary to police a freezing injunction, in ADM Popplewell LJ
Indeed, it is the imprecision of the phrase “value, location and details” which is at the heart of the problem. The recent clarification in the new model order of what is meant by “value” is a welcome development, but other deficiencies remain.
Consider, for example, the term “location”. On a broad construction, this might encompass any information which the claimant needs to notify relevant third parties of the injunction and seek further asset-preservation remedies in other jurisdictions. In the case of a loan, this might include information about both the debtor’s location and contact details and any jurisdiction and governing law clauses.
Post-ADM, though, the term can presumably only mean one of these two things.
In our view, modifications to the model asset disclosure order will therefore continue to be required for it to fulfil its purpose of giving a freezing injunction “teeth”12. There is not space in this short article for a full exploration but, in general terms, there are two approaches which could be adopted (or possibly combined).
The first is to define precisely what is meant by each of “value”, “location” and “details”. “Value”, for example, could be defined more precisely as meaning (a) the estimated realisable value and the basis for the estimate, (b) an explanation of any impairments and their quantum, (c) the nature and amount of any security interests, other encumbrances and third party beneficial interests or claims, and (d) the identities and contact details of the holders of any such interests.
The second approach is to identify what “value, location and details” means for different specified asset classes. For UK bank accounts, for example, this would include the bank name, branch, account details (e.g. account number and sort code) and credit balance. Claimants may consider preparing a schedule to the order, identifying the minimum information required for different asset types.
Perhaps, in time, the model freezing injunctions will be adapted along the above lines. In the meantime, although the new model order is a step in the right direction, there is still room for more precision. Claimants and their legal representatives may therefore look to draft their own modifications and raise them with the court, so that this important area of the law and practice of freezing injunctions can continue to be developed.
This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com
10 This will be introduced pursuant to the Civil Procedure (Amendment) Rules 2025 (SI 2025/106). Two model orders are to be introduced: (i) a freezing injunction and (ii) a combined freezing and proprietary injunction. At the time of writing, only the latter appears to be publicly available, and so references in this article to the ‘new model order’ are to the latter.
11 See paragraph 13(2) of the new model order.
12 The new model order is preceded by an “Important Note” which states: “An applicant for a proprietary injunction and a freezing injunction should always base their draft of the proposed order on the model order. The draft order presented to the court should only include those parts of the model order which are necessary based on a realistic assessment of what is required. Departures from the model order are permissible, but the existence and scope of any suggested changes must be highlighted and the reasons for the proposed departures must be explained.” This has long since been the position, but it is given particular emphasis in the “Important Note”.
ABOUT THE AUTHORS
Andrew Ayres KC Barrister
Twenty Essex
Andrew Ayres KC has been obtaining and defending freezing and search orders since 1997.
He advises on all aspects of civil fraud litigation, including early pre-emptive remedies through to enforcement, in frauds of all kinds, including trade finance, MTIC, employee, advance fee, Ponzi and crypto.
He has an established commercial disputes practice, with a core of advocacy before courts and tribunals across the globe.
He has been recommended in the legal directories in the following areas: commercial litigation, banking & finance, civil fraud, company & partnership and commercial chancery. He was also nominated for “Chancery Silk of the Year” at the 2024 Legal 500 UK Bar Awards.
Andrew has strong multi-jurisdictional connections, particularly in the Asia Pacific region, the Caribbean and within the offshore community closer to the UK. He is a leading Cayman and Eastern Caribbean advocate and adviser, focusing on all aspects of fraud, commercial, company, insolvency and trusts litigation.
Andrew has a breadth of expertise across a range of sectors and services, including aviation, banking and finance, construction and engineering, energy and natural resources, international trade, joint ventures and partnership, professional liability and risk, structured products and derivatives and TMT.
Andrew Ayres KC - Twenty Essex
Andrew Barns-Graham Barrister
3 Hare Court
Andrew Barns-Graham is a civil fraud specialist who has acted on some of the most high-profile civil fraud cases of the last decade.
The cases on his CV include National Trust Bank v Yurov, Privatbank v Kolomoisky, and Skatteforvaltningen v Sanjay Shah, all of which are have appeared in The Lawyer’s annual lists of the ‘Top 20 cases’ and have given rise to leading authorities on freezing injunctions and other civil fraud matters.
Andrew’s areas of expertise include the various causes of action associated with civil fraud, freezing injunctions (both personal and proprietary), search orders, disclosure orders (e.g. the Norwich Pharmacal and Bankers Trust jurisdictions), conflicts of laws, jurisdiction disputes, asset tracing, and enforcement remedies.
A large proportion of Andrew’s practice is international and he has worked with clients and lawyers from numerous jurisdictions around the world. He is well-versed in the challenges which arise in complex multi-jurisdictional cases involving foreign law issues or related/parallel overseas proceedings.
Andrew Barns-Graham - 3 Hare Court